Bank of England policymakers will take a crucial vote on whether to pump more
money into Britain’s stagnant economy this week as it weighs a weak outlook
for growth against high inflation.

The Bank’s Monetary Policy Committee will take its monthly vote on Thursday and while it is likely to leave interest rates on hold at 0.5pc, economists believe there is a strong possibility that it will increase its quantitative easing programme by £25bn taking it to a total of £400bn.

The voting pattern at the MPC’s February meeting suggested it was moving closer to more monetary stimulus for the UK, with three members of the nine-strong committee backing a £25bn increase in the bond buying programme.

Crucially one of the three voting in favour of more QE was Sir Mervyn King, the Bank’s Governor. In the past it has usually followed that fellow members vote in the same way at subsequent meetings.

Alan Clarke, economist at Scotiabank, said an expansion of QE was “more likely than not” at the March meeting.

“The recent noises from MPC members suggest that the MPC want to do something, but it is not yet clear what. The default policy tool has tended to be more QE and a £25bn expansion at this week’s meeting seems to be the most likely outcome,” said Mr Clarke.

The case for more stimulus appeared to strengthen last week when data showed the manufacturing sector shrank unexpectedly in February, following two months of growth.

Meanwhile Bank of England data showed that mortgage approvals fell slightly in January, and while there has been evidence that the Government’s Funding for Lending scheme is having some positive effect on overall lending, credit availability for smaller businesses is still poor.

Mr Clarke said that new figures to be published this week were likely to show that take-up of the FLS continues to be “muted.”

Inflation on the other hand remains above the 2pc target at 2.7pc, and the Bank has forecast that it is likely to remain above target for the next two years.

However, the MPC has signalled that it is willing to look beyond the target and provide more stimulus should it be justified by a weak backdrop for growth.